INVESTMENT PROFESSIONALS, INC.

Transcription

1 INVESTMENT PROFESSIONALS, INC. Part 2A of Form ADV The Disclosure Brochure San Pedro Avenue Suite 300 San Antonio, TX August 1, 2017 This brochure provides information about the qualifications and business practices of Investment Professionals, Inc. If you have any questions about the contents of this brochure, please contact us at (800) The information in this brochure has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority. Investment Professionals, Inc. ( IPI ) is a Registered Investment Adviser. Registration of an Investment Adviser does not imply any level of skill or training. The oral and written communications of an Adviser provide you with information you may use to determine to hire or retain an Adviser. Additional information about the Investment Professionals, Inc. is also available on the SEC s website at: 1

2 Item 2 - Summary of Material Changes The Brochure, dated August 1, 2017 is an amended update to our last annual filing dated March 30, IPI is required to identify and discuss material changes made to this Brochure since its last annual update. Following is a summary of material changes: Effective August , the minimum Financial Planning fee is lowered to $500 and the Hourly Consulting Services are no longer being offered and the subsequent sections have been removed from this document. There were four versions of the Program, known as Advisor Managed Choice I (Rep as PM), Advisor Managed Choice II (Rep as PM), Advisor Managed Choice III (Rep as PM), and Unified Managed Account (UMAv2) (Rep as PM). The Advisor Managed Choice II (Rep as PM) and Advisor Managed Choice III (Rep as PM) Programs are closed to new investors July 1, The Advisor Managed Choice I (Rep as PM) Program is renamed Advisor as PM (Portfolio Manager) and is still available to new investors. The Unified Managed Account (UMAv2) (Rep as PM) continues to remain open to new investors. The Unified Managed Account PMC Multi Managed Account is closed July 1, Third Party Strategists added to the platform are Beaumont Capital Management, Efficient Market Advisors, Standard & Poors Investment Advisory Services, LLC, and Windham Capital Management. On July 3, 2017 this brochure was amended to reflect AMPF Holding Corporation s 100% ownership of IPI. Additionally, IPI is no longer affiliated with S.B. Value Partners LP, is no longer the sub-adviser to any private funds, does not have discretionary authority or custody of clients assets. Please review this brochure along with the Part 2A Appendix 1 Advisor as PM (Portfolio Manager) Wrap Brochure Program for information about your account including available programs, additions of new program managers and new fee structures. Please review this brochure for information about your account including available programs and new fee structure. The fees and charges are applicable to new accounts opened on or after the new pricing effective date, June 23, Accounts opened prior to this date will reflect pricing that was previously in effect. The new fee schedule may be applied to certain accounts opened prior to the effective date depending on the account and the program type. New fee structures will only be applied in the event that it reduces the overall client fee. Clients may consult with their financial advisor about their current program selection and determine if a change in program or fees may be necessary. Changes have been made to each applicable section of this brochure to reflect these changes and additional disclosures. We will provide you with a new Brochure, at any time, without charge. Currently, our Brochure may be requested by contacting IPI at (800) and is available on our web site ( under the Disclosures section, free of charge. 2

3 Item 3 - Table of Contents Item 2 - Summary of Material Changes... 2 Item 3 - Table of Contents... 3 Item 4 - Advisory Business... 6 Financial Planning Services... 6 Third-Party Money Managers... 7 Program Offerings... 8 Private Asset Management (PAM)... 9 Advisor as PM (previously Advisor Managed Choice) Program... 9 Third Party Strategists Program Fund Strategist Program - PMC Guided Portfolios (Unified Managed Account -UMAv1 Envestnet PMC Managed) Mutual Fund Portfolio Program Separately Managed Account (SMA) Program Unified Managed Account (UMA) Program Unified Managed Account UMAv2 (Rep as PM) Program Unified Managed Account Multi Managed Account (PMC MMA) Program SEI Investments Management Corporation SEI Family of Funds and SEI Asset Allocation Program Managed Account Solutions Program SEI Distribution-Focused Strategies Program Sub-advisory Programs Direct Managed Account Program (b) Programs Pentegra Investors Inc CLS Investments LLC Legacy Programs Closed to New Investors as of April 1, AssetMark Inc AMG Funds, LLC BTS Asset Management, Inc

4 LMCG Investments, LLC Lockwood Advisors, Inc PTS Asset Management Item 5 - s and Compensation Financial Planning s Advisory s Investment Advisor s for Program Offerings s for participants in programs co-sponsored by IPI and Envestnet: Envestnet Advisor as PM (Portfolio Manager) Program Fund Strategist Portfolios (FSP) Program Separately Managed Account (SMA) Program Unified Managed Account (UMA) Program SEI Pentegra Retirement Services CLS Investments, LLC Item 6 - Performance Based s and Side-by-Side Management Item 7 - Types of Clients Item 8 - Methods of Analysis, Investment Strategies and Risk of Loss Methods of Analysis Investment Strategy Investment Risks Item 9 - Disciplinary Information Item 10 - Other Financial Industry Activities and Affiliations IPI Trust Services Conflicts of Interest Item 11 - Code of Ethics, Participation or Interest in Client Transactions and Personal Trading Item 12 - Brokerage Practices Item 13 - Review of Accounts

5 Item 14 - Client Referrals and Other Compensation Item 15 - Custody Item 16 - Investment Discretion Item 17 - Voting Client Securities Item 18 - Financial Information

6 Item 4 - Advisory Business Investment Professionals, Inc. ( IPI or the Company ) has been in business since The principal owner is AMPF Holding Corporation, a wholly-owned subsidiary of Ameriprise Financial, Inc. IPI is registered with the SEC as an investment adviser under the Investment Advisers Act of The Company offers investment advice and financial planning services. Additionally, IPI and its registered agents serve in the capacity of a finder in regard to trust accounts and business referred to third party trust providers. As of December 31, 2016, IPI had $621,715,524 of non-discretionary assets under management. IPI s advisory services are made available primarily through individuals registered with IPI as Investment Adviser Representatives ( IARs ). For more information about an IAR providing advisory services, please refer to the Brochure Supplement. The Brochure Supplement is a separate document that the IAR provides along with this Disclosure Brochure. If you did not receive a Brochure Supplement, please contact the IAR or send an to compliance@invpro.com. Your Investment Advisory Representative and you will discuss your financial condition, risk tolerance, and investment objectives in order to identify an investment program or financial planning services that will meet your goals and objectives. You will be provided with written documentation (i.e. Statement of Investment Selection, Financial Plan, etc.) as applicable to your particular circumstances. Financial Planning Services IPI offers Financial Planning Services that are designed to combine advice relating to a range of financial subjects selected by the client. Investment Advisory Representatives design basic, standard, complex or advanced plans. In designing a financial plan, regardless of the complexity, the Investment Advisory Representative will: Interview the client, analyze the client s financial needs, and assist the client in developing realistic goals and objectives based on information provided by the client. The Investment Advisory Representative may also clarify planning problems and outline strategies designed to meet the client s goals. A client typically retains IPI to perform comprehensive financial planning covering topics such as investments, taxes, insurance, education, retirement, and estate planning, among other things. A client may also engage an Investment Advisory Representative for projects that require annual or more frequent reviews if more complex long-term planning is needed. Prepare a written financial plan according to the scope of services requested by the client, the information gathered during the interview, and the needs evaluation conducted by the financial advisor. The financial plan may include 6

7 establishing a clear set of objectives, an outline of resources, a written investment policy statement, an asset allocation model, strategy recommendations, retirement, estate, education, or insurance planning and product recommendations. The scope of the financial plan will be determined, described and agreed upon in the Financial Planning Agreement. Review the financial plan periodically according to the scope and frequency agreed upon in advance with the client. All Financial Planning Services are based on information provided by the client. Changes in the client s financial condition, personal circumstances, goals, or general economic conditions may trigger changes to the financial plan. It is the client s responsibility to be certain IPI has current and accurate information to enable the Investment Advisory Representative to prepare the initial plan, and it is the client s responsibility to inform the Investment Advisory Representative of any material changes, which may affect the investment recommendations and planning strategies. Clients decide which investment recommendations to accept and implement. Clients are also free to select any brokerage, insurance or other product provider to purchase (or sell) the investments, insurance, or other products discussed with IPI. IPI is also a securities broker-dealer and its Investment Advisory Representatives are licensed to offer securities and insurance products. IPI and its Investment Advisory Representatives will receive transaction-based compensation (e.g. commissions, 12b-1 fees) for the sale of such products should a client decide to purchase them through IPI s broker-dealer. This transaction-based compensation creates a conflict of interest. If the client elects to act on any of the recommendations, the client is under no obligation to effect any transactions through IPI. Third-Party Money Managers IPI refers clients to independent third-party money managers for discretionary or non-discretionary investment advisory and account supervisory services on a fee-only basis. These Programs offer clients either a single, all-encompassing fee for asset allocation, investment management, securities transactions, custody, clearing, consulting, and performance reporting or a single fee for asset allocation, investment management, consulting and performance reporting with the Client bearing the cost of securities transactions, custody and clearing. Each of the third-party money managers discloses the fee structure applicable to each Program. The Company receives a portion of the advisory fee paid to the third-party money managers. In each Program, the Client receives individualized investment advisory services tailored to their particular investment objectives, risk tolerances and guidelines. Clients should be sure to review the Form ADV Part 2 Disclosure Brochure of each separate account manager with whom they choose to do business. The Company will provide a copy at the time you enter into an investment advisory contract with IPI. 7

8 Program Offerings The following investment programs are offered to IPI clients: 1. Private Asset Management (PAM) 2. SEI 1.1. Advisor as PM (Portfolio Manager) (previously named Advisor Managed Choice) 1.2. Third Party Strategists 1.3. Mutual Fund Portfolios 1.4. Separately Managed Accounts (SMA) 1.5. Unified Managed Accounts (UMA) Unified Managed Account UMAv1 Program Unified Managed Account UMAv2 (Advisor Managed) Program 2.1. SEI Family of Funds and SEI Asset Allocation Program 2.2. Managed Account Solutions (MAS) 2.3. SEI Distribution Focused Strategies (DFS) 2.4. Sub-advisory Programs (Off Platform Models) 2.5. Direct Managed Accounts (b) Programs 3.1. Pentegra Investors, Inc CLS Investments, LLC. 4. Legacy Programs Closing to New Investors as of April 1, 2017 with a transition period to July 1, 2017: 4.1. AssetMark, Inc AMG Funds, LLC BTS Asset Management, Inc LMCG Investments, LLC Lockwood Advisors, Inc PTS Asset Management 8

9 Private Asset Management (PAM) IPI offers the Private Asset Management (PAM) Program through Envestnet Portfolio Solutions (EPS) a third party independent registered investment advisor. Upon enrollment in PAM, IPI opens an account in your name at Pershing, LLC, (Pershing) a third party broker/dealer which is a wholly owned subsidiary of the Bank of New York/Mellon Corporation. Pershing is located at One Pershing Square, Jersey City, New Jersey Pershing provides custody, trade execution, clearing, and other brokerage-related services for PAM accounts. EPS offers a variety of proprietary and third party mutual fund wrap programs, exchange traded fund (ETF) wrap programs, SMA wrap programs, and UMP wrap programs. An IPI client may also have their IPI Investment Advisor Representative construct a customized investment wrap portfolio on a non-discretionary basis (Advisor Managed Choice). The following programs sponsored by EPS are available to IPI clients. Please refer to Form ADV Part 2A for EPS for additional information about their product offerings including investment options, risks and fees. This brochure may be found at Advisor as PM (previously Advisor Managed Choice) Program Advisor as PM (Portfolio Manager) previously named Advisor Managed Choice ( the Program ) is a non-discretionary investment advisory program sponsored by Investment Professionals, Inc, ( IPI or the Advisor ). This brochure contains important information relating to the Program including client responsibilities for their Program Accounts and other matters relevant to a decision whether to participate in the Program. You should read this brochure carefully prior to deciding whether the Program is appropriate for you and ask your IPI Investment Advisory Representative any questions that you may have. The Program is designed to give you the flexibility to use your account, as you deem appropriate within certain prescribed limits involving asset allocation, security selection, concentration, and other factors. Although your IPI Investment Advisory Representative will furnish you with investment advice and guidance, all purchases and sales of securities in your account will take place only upon your specific instruction deeming this account Non-Discretionary. Non- Discretionary meaning that you, the client, must approve all changes and trading within the portfolios. You assume the full responsibility for all trading decisions you make, including risk of loss. The Advisor as PM options are Non-Discretionary Rep as Portfolio Manager (PM) portfolios. There were four versions of the Program, known as Advisor Managed Choice I (Rep as PM), Advisor Managed Choice II (Rep as PM), Advisor Managed Choice III (Rep as PM), and Unified Managed Account (UMAv2) (Rep as PM). The Advisor Managed Choice II (Rep as PM) and Advisor Managed Choice III (Rep as PM) Programs are closed to new investors July 1, The Advisor Managed Choice I (Rep as PM) Program is renamed Advisor as PM (Portfolio Manager) 9

10 and is still available to new investors. The Unified Managed Account (UMAv2) (Rep as PM) continues to remain open to new investors. Please review this brochure along with the Part 2A Appendix 1 Advisor as PM Portfolio Manager Wrap Brochure Program for information about your account including available programs, additions of new program managers and new fee structures. Advisor Managed Choice I (Rep as PM) and Advisor Managed Choice II (Rep as PM) Program Accounts may contain individual equities and bonds, unit investment trusts, open and closed end mutual funds, Exchange Traded Funds (ETFs), Exchange Traded Notes (ETNs) Traded Real Estate Investment Trusts (REITs), and other securities that may be suitable for you. Advisor Managed Choice III (Rep as PM) Program Accounts contain only mutual funds. The Unified Managed Account (UMAv2) (Rep as PM) offers the diversification and tax management benefits of a separate account with the operational ease of a mutual fund portfolio by utilizing Envestnet PMC's (Portfolio Management Company) proprietary in-house Overlay Portfolio Management process. The Unified Managed Account (UMAv2) (Rep as PM) allows advisors to build customized portfolio models using a wide variety of asset classes and to manage multiple client accounts following each model. This investment strategy delivers the benefits of combining traditional separately managed accounts, mutual funds, and ETFs in a single fully diversified portfolio. Unless otherwise specified, the term Advisor as PM or Advisor as Portfolio Manager refers to all four versions of the Program including those no longer open to new investors. Third Party Strategists Program EPS makes available asset allocation strategies of a variety of mutual fund and ETF asset managers in the Third-Party Fund Strategists program. Each portfolio may consist solely of mutual funds or ETFs or may combine both types of funds to pursue different investment strategies and asset class exposures. Pursuant to a licensing agreement entered into with the asset manager, EPS provides overlay management of the portfolios and performs administrative and trade order implementation duties pursuant to the direction of the asset manager. The current participants in the Third-Party Strategist Program are: Beaumont Capital Management Braver Capital Management Efficient Market Advisors Fund Evaluation Group, LLC. 10

11 Frank Russell Investment Company Frontier Investment Management Company Innealta Capital Paradigm Investment Group Portfolio Management Consultants Sage Advisory Services Standard & Poors Investment Advisory Services, LLC. Vanguard Windham Capital Management The following programs sponsored by Portfolio Management Consultants, ( PMC ) a subsidiary of Envestnet are also considered to be part of the Third-Party Strategist Program: PMC ActivePassive Portfolios PMC ETF Portfolios PMC Income Fund Portfolios PMC Paradigm Liquid Alternatives PMC Select Dynamic Portfolios PMC Select Strategic Portfolios PMC Select Strategic ETF Portfolios Fund Strategist Program - PMC Guided Portfolios (Unified Managed Account - UMAv1 Envestnet PMC Managed) The Unified Managed Account UMAv1 Program (Envestnet PMC Managed) is categorized under the Fund Strategist Program utilizing the PMC Guided Portfolios (formerly referred to as the Multi- Manager Account) program. For Unified Managed Account UMAv1 Program (Envestnet PMC Managed), your IPI Investment Advisory Representative will furnish you with investment advice and guidance and recommend a Mutual Fund Portfolio that is a mutual fund wrap program in which Envestnet PMC acts as the investment manager, objectively populating and managing the portfolio in line with the your investment objective. This product is based on PMC's recommended models. The advisor has the ability to override the model into which the client has scored via the profiling capability and to 11

12 override individual mutual fund selections with alternate choices selected by Envestnet Portfolio Solutions, Inc. Envestnet PMC provides ongoing investment monitoring, rebalancing, performance measurement and comprehensive quarterly performance reporting throughout the life of the account. PMC Guided Portfolios (formerly referred to as the Multi-Manager Account) program, this program allows your IPI Investment Advisory Representative to furnish you with investment advice and guidance and recommend portfolios in the PMC Guided Portfolios program (formerly referred to as the Multi-Manager Account program), the Client is offered a single portfolio created and managed by EPS that accesses multiple asset managers and Funds representing various asset classes. EPS allocates the portfolio across investment asset classes and complementary asset managers to create a blend that fits the Client s investment profile and risk tolerance. EPS includes Funds in the PMC Guided Portfolios program to complete the asset class exposure of the asset managers utilized. For portions of some of the PMC Guided Portfolios portfolio, EPS may also utilize proprietary strategies such as PMC Dynamic ETF Portfolios, Enhanced Portfolio Strategies, PMC Quantitative Portfolios or a PMC Fund. A portion of the assets that make up the PMC Guided Portfolios program may be invested in the PMC Funds, where appropriate, in conjunction with using multiple asset managers and other Funds that comprise the PMC Guided Portfolios. EPS provides, through its affiliate Envestnet Asset Management, Inc. ( EAM ), a registered investment adviser and asset management platform provider, technology, operational and administrative support services to EPS advisory program accounts and EAM serves as the investment advisor to the PMC Funds, the amount that EPS receives with respect to PMC Guided Portfolios program assets that are invested in the PMC Funds may be greater than just the portion of the PMC Guided Portfolios program fee remitted to EPS. In order to address the economic incentive that EPS or EAM may have in investing PMC Guided Portfolios program assets in PMC Funds, when PMC Funds are utilized in a PMC Guided Portfolio, EPS makes a corresponding fee reduction to the fee that EPS normally charges for managing the PMC Guided Portfolios in order to offset the fees it receives as a result of those PMC Guided Portfolios assets being invested in the PMC Funds. EPS and EAM may still recognize ancillary benefits in investing PMC Guided Portfolios assets in PMC Funds. Mutual Fund Portfolio Program This discretionary Program includes mutual funds selected by Envestnet based on the responses to the Profile or other appropriate suitability analysis submitted by you. Mutual funds shall be purchased on a no load or a load waived basis through the Custodian. The Program Account shall be managed in accordance with a model portfolio created by Envestnet. Rebalancing will be conducted as needed and generally, when the portfolio has deviated from its target asset allocation or as market conditions warrant. 12

13 Separately Managed Account (SMA) Program This Program includes access to an actively managed investment portfolio chosen from a roster of independent asset managers ( Sub-Managers ) from a variety of disciplines. The SMA shall contain a portfolio of individually owned securities that can be tailored to fit your investing preferences. Envestnet Portfolio Solutions, Inc. retains the Sub-Managers for portfolio management services in connection with the SMA program through separate agreements. Unified Managed Account (UMA) Program This discretionary Program includes general securities, including mutual funds, Exchange Traded Funds ( ETFs ), stocks and bonds selected by Envestnet based on the responses to the Profile or other appropriate suitability analysis submitted by you. Mutual funds shall be purchased on a no load or a load waived basis through the Custodian. Envestnet has arrangements with certain other registered investment advisors who have agreed to act as third-party providers of research services ( Research Providers ). Envestnet shall from time to time obtain purchase and sale recommendations of such Research Providers in the form of model portfolios or otherwise as appropriate in order that Envestnet may manage certain assets in accordance with a Research Provider s recommendations. Envestnet shall have unlimited investment discretion with respect to any changes to investments in the Program Accounts, within the parameters of the selected portfolio model. Rebalancing will be conducted as needed and generally, when the portfolio has deviated from its target asset allocation or as market conditions warrant. Unified Managed Account UMAv2 (Rep as PM) Program The Unified Managed Account UMAv2 (Rep as PM) Program allows advisors to build customized portfolio models using a wide variety of asset classes and to manage multiple client accounts following each model. This investment strategy delivers the benefits of combining traditional separately managed accounts, mutual funds, and ETFs in a single fully diversified portfolio. Please refer to Form ADV Part 2A for EPS for additional information about their product offerings including investment options, risks and fees. This brochure may be found at Unified Managed Account Multi Managed Account (PMC MMA) Program Closed to new investors July 1, PMC Guided Portfolios (formerly referred to as the Multi-Manager Account) program, this program allows your IPI Investment Advisory Representative to furnish you with investment 13

14 advice and guidance and recommend portfolios in the PMC Guided Portfolios program (formerly referred to as the Multi-Manager Account program), the Client is offered a single portfolio created and managed by EPS that accesses multiple asset managers and Funds representing various asset classes. EPS allocates the portfolio across investment asset classes and complementary asset managers to create a blend that fits the Client s investment profile and risk tolerance. EPS includes Funds in the PMC Guided Portfolios program to complete the asset class exposure of the asset managers utilized. For portions of some of the PMC Guided Portfolios portfolio, EPS may also utilize proprietary strategies such as PMC Dynamic ETF Portfolios, Enhanced Portfolio Strategies, PMC Quantitative Portfolios or a PMC Fund. A portion of the assets that make up the PMC Guided Portfolios program may be invested in the PMC Funds, where appropriate, in conjunction with using multiple asset managers and other Funds that comprise the PMC Guided Portfolios. EPS provides, through its affiliate Envestnet Asset Management, Inc. ( EAM ), a registered investment adviser and asset management platform provider, technology, operational and administrative support services to EPS advisory program accounts and EAM serves as the investment advisor to the PMC Funds, the amount that EPS receives with respect to PMC Guided Portfolios program assets that are invested in the PMC Funds may be greater than just the portion of the PMC Guided Portfolios program fee remitted to EPS. In order to address the economic incentive that EPS or EAM may have in investing PMC Guided Portfolios program assets in PMC Funds, when PMC Funds are utilized in a PMC Guided Portfolio, EPS makes a corresponding fee reduction to the fee that EPS normally charges for managing the PMC Guided Portfolios in order to offset the fees it receives as a result of those PMC Guided Portfolios assets being invested in the PMC Funds. EPS and EAM may still recognize ancillary benefits in investing PMC Guided Portfolios assets in PMC Funds. 14

15 SEI Investments Management Corporation SEI Investments Management Corporation (SEI) is a registered investment advisor that offers investment advisors with turnkey wealth management services through outsourced investment strategies. The following programs sponsored by SEI are available to IPI clients. Please refer to Form ADV Part 2A for SEI Advisor Network: Standard and the Form ADV Part 2A Appendix 1, Wrap Program Brochure: Managed Account Solutions Advisor Network for additional information about their product offerings including investment options, risks and fees. This brochure may be found at SEI Family of Funds and SEI Asset Allocation Program SEI Investments Management Corporation (SIMC) serves as the investment advisor to the SEI family of mutual funds each registered with the SEC. The Family of Funds program is designed to match you with a series of SEI mutual funds that are consistent with your investment goals and objectives. The Asset Allocation Program is designed to provide you with pre-defined investment models of SEI mutual funds that are consistent with your investment goals and objectives. Managed Account Solutions Program Managed Account Solutions ( MAS ) is a wrap fee program which charges a bundled fee that includes advisory, brokerage and custody services. SIMC sponsors and is advisor to MAS, which is offered to you through IPI. A description of MAS, including the services provided and the related fees, can be found in Form ADV Part 2A Appendix 1, Wrap Program Brochure: Managed Account Solutions Advisor Network. SEI Distribution-Focused Strategies Program The SEI Distribution-Focused Strategies ( DFS ) which is offered to you through IPI. The program is designed for investors requiring regular distributions from their investment accounts. In this program, you will invest in a portfolio of SEI Funds or ETFs within a strategy seeking to generate a targeted level of distributions using a broadly diversified portfolio of assets. 15

16 Sub-advisory Programs SIMC offers sub-advisory services through third-party custody platforms ( Off Platform ). Under these programs, SIMC is hired to provide certain discretionary or non-discretionary sub-advisory services in connection with the services IPI provides to you. Generally, these advisory services consist of SIMC recommending (and periodically updating various asset allocation portfolios or investment models ( Off Platform Models ) consisting of allocations to SEI Funds and, in some cases, other assets types including models consisting of allocations to ETFs. Direct Managed Account Program The SIMC investment management unit provides certain investment management services directly to you. These investment management services are not tailored to accommodate your specific needs or objectives, but rather the program is designed to enable you to be matched with a portfolio that is consistent with your investment goals and objectives. 403(b) Programs IPI provides investment advisory services to employees of the Texas A&M University and the University of Texas through the providers listed below. If you are an employee of the University of Texas or Texas A&M University, please consult your Benefits Department for further information about these programs. Pentegra Investors Inc. This investment option is available to IPI clients who are employees of Texas A&M University. Pentegra Trust Company is a wholly owned subsidiary of Pentegra Services, Inc. Pentegra Retirement Services provides retirement plan services to financial institutions, corporations, municipalities, nonprofit organizations and educational institutions. Pentegra Retirement Services offers employees of Texas A&M University the opportunity to save for retirement tax-deferred, using no load or waived load mutual funds. Investment Advisory Representatives provide investment advice regarding asset allocation, purchases, sales, and hold recommendations related to the mutual funds available on the platform. If you are an employee of the Texas A&M University, please consult your Benefits Department for details about the programs. Additionally, you may refer to the Texas A&M University Retirement Programs Brochure and website for information. For additional information regarding Pentegra, please refer to Form ADV Part 2A for Pentegra Institutional Client Solutions for additional information about their product offerings including 16

17 investment options, risks and fees. This brochure may be found at CLS Investments LLC. CLS Investments LLC. (CLS) is a registered investment advisor that offers investment strategies that span multiple investment styles and are designed to serve clients with varying degrees of active management. IPI s Investment Advisory Representative acts as a Solicitor to CLS. CLS and IPI have entered into an agreement where CLS will provide investment management advice to employees of the University of Texas enrolled in the Optional Retirement Program, UTSaver 457(b) Deferred Compensation Plan, or the UTSaver 403(b) Tax-Sheltered Annuity Program. If you are an employee of the University of Texas, please consult your Benefits Department for details about these programs. Please refer to Form ADV Part 2A and Form ADV Part 2A, Appendix 1 (Wrap Program Brochure) for CLS for additional information about their product offerings including investment options, risks, and fees. These brochures may be found at Legacy Programs Closed to New Investors as of April 1, 2017 AssetMark Inc. This program is closed to new investors as of April 1, 2017 with a transition period to July 1, AssetMark Inc. (AssetMark) is a registered investment advisor that is the sponsor of the AssetMark Platform (the Platform). AssetMark offers a variety of investment options through the Platform including mutual fund wrap programs, ETF wrap programs, combined mutual fund and ETF wrap accounts, Separately Managed Accounts, and Unified Managed Accounts. Please refer to Form ADV Part 2A for AssetMark for additional information about their product offerings including investment options, risks and fees. This brochure may be found at 17

18 AMG Funds, LLC This program is closed to new investors as of April 1, 2017 with a transition period to July 1, AMG Funds, LLC. (AMG) is a registered investment advisor that offers a variety of investment strategies to investors. IPI clients may participate in AMGs ManagersChoice program. ManagersChoice is a series of globally diversified asset-allocations models that are made available through third party intermediaries. The models are constructed utilizing asset-allocation tools and implemented with investments in a diversified mix of Affiliated and unaffiliated mutual funds. These portfolios target a specific risk tolerance, capital appreciation potential and income need while incorporating consideration of time horizon and, in several portfolios, tax considerations. Please refer to Form ADV Part 2A for AMG Funds, LLC, for additional information about their product offerings including investment options, risks, and fees. This brochure may be found at BTS Asset Management, Inc. This program is closed to new investors as of April 1, 2017 with a transition period to July 1, BTS Asset Management Inc., is a registered investment advisor the provides a variety of equity and fixed income investment strategies to clients. These strategies include, but are not limited to, wrap fee programs, tactical asset allocation portfolios, strategic asset allocation portfolios, multistrategy asset allocation portfolios, and hedged income portfolios. Please refer to Form ADV Part 2A for BTS Asset Management, Inc. for additional information about their product offerings including investment options, risks, and fees. This brochure may be found at LMCG Investments, LLC. This program is closed to new investors as of April 1, LMCG Investments, Inc. (LMCG) is a registered investment advisor that offers a variety of investment programs to clients. It is owned by the Royal Bank of Canada, Mr. Lee Paul Munder, and by LMCG s employees. Please refer to Form ADV Part 2A for LMCG for additional information about their product offerings including investment options, risks, and fees. This brochure may be found at 18

19 Lockwood Advisors, Inc. This program is closed to new investors as of April 1, 2017 with a transition period to July 1, Lockwood Advisors, Inc. (Lockwood) is a registered investment advisory that offers investors portfolio management services in various wrap fee programs. Lockwood is a wholly owned subsidiary of the Bank of New York/Mellon. Please refer to Form ADV Part 2A for Lockwood Advisors for additional information about their product offerings including investment options, risks, and fees. Lockwood also maintains a Form ADV Part 2A Appendix 1 for each of their wrap fee programs. Please refer to the appropriate Form ADV Part 2A Appendix 1 for detailed information about a specific wrap fee program. These brochures may be found at PTS Asset Management This program is closed new investors as of April 1, PTS Asset Management (PTS) is a registered investment advisor that offers investors a variety of investment and asset allocation models. Please refer to Form ADV Part 2A for PTS Asset Management for additional information about their product offerings including investment options, risks, and fees. These brochures may be found at 19

20 Item 5 - s and Compensation Financial Planning s All fees for Financial Planning Services are negotiable. IPI's fees for providing Financial Planning Services are typically charged by plan complexity (basic, moderate, complex or advanced) and net worth. The complexity of the plan is based on several factors including, but not limited to, review frequency, net worth, investable assets, income, types of assets, ownership, family status, years to goal, and special circumstances. Plan Type Minimum* Maximum* Basic Financial Plan $500 $1,500 Moderate Financial Plan $1,000 $10,000 Complex Financial Plan $1,500 $15,000 Advanced Financial Plan $2,500 $20,000 *Suggested minimums/maximums. All fees are negotiable. Financial Plans must be delivered within six (6) months of the execution of the Financial Planning Services Agreement. Please note: IPI does not accept the prepayment of fees in excess of $1,200 six months or more in advance from any client. Advisory s All fees charged for advisory services are negotiable depending on the program selected, type of services, the type of client, the size of an account, the relationship of the client with the advisor, the range of services to be performed, the number of related accounts being managed, the percentage of client holdings in fixed income assets and/or the length of time the account has been under management. Depending on the program selected by the client, fees are calculated and billed by varying means. Advisor s are paid to your IPI Investment Advisory Representative for providing investment advice to you and may be negotiated and are in addition to other types of fees that may be found in the sponsor ADV Part 2A Brochure and ADV Part 2A (Appendix 1) Brochures of which each are referenced in the specific sponsor sections below. 20

21 Investment Advisor s for Program Offerings Advisor s Minimum Maximum Up to $250K 0.50% 2.00% $250K-500K 0.50% 2.00% $500K-1M 0.50% 2.00% $1M+ 0.50% 2.00% s for participants in programs co-sponsored by IPI and Envestnet: Please review this brochure for information about your account including available programs and new fee structure. The fees and charges are applicable to new accounts opened on or after the new pricing effective date, June 23, Accounts opened prior to this date will reflect pricing that was previously in effect. The new fee schedule may be applied to certain accounts opened prior to the effective date depending on the account and the program type. New fee structures will only be applied in the event that it reduces the overall client fee. Clients may consult with their financial advisor about their current program selection and determine if a change in program or fees may be necessary. Envestnet Envestnet s are calculated and billed quarterly in advance based on a percentage of the average daily fair market value of assets in the Program Account during each previous calendar quarter. Program Accounts opened during any calendar quarter will be based on the average daily fair market value of assets in the Program Account during the first month, prorated for the days the Program Account is open during the first calendar quarter. Please refer to Form ADV Part 2A for Envestnet for additional information about their product offerings including investment options, risks, and fees. This brochure may be found at Advisor as PM (Portfolio Manager) Program s for Advisor as PM accounts are described in detail in the IPI Form ADV Part 2A Appendix 1 (wrap fee program brochure). You will be charged an advisory fee for the management of your Program Account. This advisory fee covers services which include portfolio construction, asset allocation, the ongoing review, at least annually, of your Program Account and certain brokerage related services. The advisory fee is charged quarterly in advance based upon the average daily market value of the assets in your Program Account during the previous calendar quarter. The market value of assets designated by 21

22 you as Unsupervised Assets (as defined in the Services, s & Compensation section of this brochure) will not be included in the average daily market value calculation. The advisory fee has two components: a Platform and an Advisor. The Platform compensates IPI, EPS, and Pershing for the services provided to your Program Account, including use of the EPS platform, trading, and custodial services. The Advisor is paid to your IPI Investment Advisory Representative for providing investment advice to you and may be negotiated. For accounts with third party managers, the Platform fee will include the Manager. In the case of the Advisor as PM, the advisor is the manager. Understanding your fees: Sponsor + Manager = Platform Platform + Advisor = Client (Excludes expense ratios of the model) The advisory fee charged to your Program Account does not cover charges resulting from SEC fees, electronic fund and wire transfer fees, and miscellaneous charges. It does not include fees charged by mutual fund companies to manage mutual funds held in your Program Account. You may obtain a schedule of these miscellaneous charges from your IPI Investment Advisory Representative. Please refer to the mutual fund prospectus of each mutual fund for fees charged by the mutual fund company. Advisor as PM (Portfolio Manager) previous name Advisor Managed Choice I Advisor Client Total Total Advisor Advisor Minimum Sponsor Mgr. Platform Min Max Client APM Program s $0-$250, % N/A 0.25% 0.50% 2.00% 0.75% $250,000-$500, % N/A 0.23% 0.50% 2.00% 0.73% $500,000-$1M 0.20% N/A 0.20% 0.50% 2.00% 0.70% $1M+ 0.14% N/A 0.14% 0.50% 2.00% 0.64% Min. Investment $50,000 Min. Annual $100 Office J8D Sponsor + Manager = Platform Platform + Advisor = Client (excludes expense ratios of the model) 22

23 Advisor as PM (Portfolio Manager) previous name Advisor Managed Choice II Closed to new investors as of July 1, 2017 Total Sponsor Mgr. Total Platform Advisor Advisor Min Advisor Max Client Minimum Client APM Program $0-$250, % N/A 0.25% 0.50% 2.00% 0.75% $250,000-$500, % N/A 0.23% 0.50% 2.00% 0.73% $500,000-$1M 0.21% N/A 0.21% 0.50% 2.00% 0.71% $1M+ 0.15% N/A 0.15% 0.50% 2.00% 0.65% Min. Investment $35,000 Min. Annual $50 Office JUY Sponsor + Manager = Platform Platform + Advisor = Client (excludes expense ratios of the model) Closed to new investors July 1, 2017 The transaction fee is $ per trade of 1-1,000 shares and $ plus $ per share for trades of 1,000+ shares. Example Sell order for 2,000 shares would generate a $45.00 transaction fee. 2,000 X.015 = $30.00 (+ $15.00) = $ Advisor as PM (Portfolio Manager) previous name Advisor Managed Choice III Closed to new investors as of July 1, 2017 Total Sponsor Mgr. Total Platform Advisor Advisor Min Advisor Max Client Minimum Client APM Program $0-$250, % N/A 0.10% 0.50% 2.00% 0.60% $250,000-$500, % N/A 0.10% 0.50% 2.00% 0.60% $500,000-$1M 0.10% N/A 0.10% 0.50% 2.00% 0.60% $1M+ 0.10% N/A 0.10% 0.50% 2.00% 0.60% Min. Investment $10,000 Min. Annual $50 Office Q34 Sponsor + Manager = Platform Platform + Advisor = Client (excludes expense ratios of the model) Closed to New Investors as of July 1,

24 Fund Strategist Portfolios (FSP) Program You will be charged an advisory fee for the management of your Program Account. This advisory fee covers services which include portfolio construction, asset allocation, the ongoing review, at least annually, of your Program Account and certain brokerage related services. The advisory fee is charged quarterly in advance based upon the average daily market value of the assets in your Program Account during the previous calendar quarter. The market value of assets designated by you as Unsupervised Assets (as defined in the Services, s & Compensation section of this brochure) will not be included in the average daily market value calculation. The advisory fee has two components: a Platform and an Advisor. The Platform compensates IPI, EPS, and Pershing for the services provided to your Program Account, including use of the EPS platform, trading, and custodial services. The Advisor is paid to your IPI Investment Advisory Representative for providing investment advice to you and may be negotiated. For accounts with third party managers, the Platform fee will include the Manager. In the case of the Advisor as PM, the advisor is the manager. Understanding your fees: Sponsor + Manager = Platform Platform + Advisor = Client (Client excludes expense ratios of the funds in the model) The advisory fee charged to your Program Account does not cover charges resulting from SEC fees, electronic fund and wire transfer fees, and miscellaneous charges. It does not include fees charged by mutual fund companies to manage mutual funds held in your Program Account. You may obtain a schedule of these miscellaneous charges from your IPI Investment Advisory Representative. Please refer to the mutual fund prospectus of each mutual fund for fees charged by the mutual fund company. Fund Strategist Portfolio - Strategic Sponsor Manager Platform Advisor Client FSP Strategic Sponsor Mgr. Avg. Min Mgr. Avg. Max 24 Min Platform s Max Platform Advisor Min Advisor Max Minimum Client $0-$250, % 0.00% 0.23% 0.22% 0.45% 0.50% 2.00% 0.72% $250,000-$500, % 0.00% 0.23% 0.20% 0.43% 0.50% 2.00% 0.70% $500,000-$1M 0.18% 0.00% 0.23% 0.18% 0.41% 0.50% 2.00% 0.68% $1M+ 0.15% 0.00% 0.23% 0.15% 0.38% 0.50% 2.00% 0.65% Min. Investment $10,000-$50,000 Min. Annual $75 Office J8A Sponsor + Manager = Platform Platform + Advisor = Client (excludes expense ratios of the model)

25 Fund Strategist Portfolio - Dynamic or Tactical Sponsor Manager Platform Advisor Mgr. Mgr. Min Max Advisor FSP Dynamic or Advisor Minimum Min Sponsor Avg. Platform Platform Tactical Avg. Min Client Max s Max Min $0-$250, % 0.02% 0.37% 0.31% 0.66% 0.50% 2.00% 0.81% $250,000-$500, % 0.02% 0.37% 0.27% 0.62% 0.50% 2.00% 0.77% $500,000-$1M 0.20% 0.02% 0.37% 0.22% 0.57% 0.50% 2.00% 0.72% $1M+ 0.17% 0.02% 0.37% 0.19% 0.54% 0.50% 2.00% 0.69% Min. Investment $10,000-$50,000 Min. Annual $125 Office JQT Sponsor + Manager = Platform Platform + Advisor = Client (excludes expense ratios of the model) Client PMC Mutual Fund Guided Portfolios Sponsor Mgr. Avg. Platform Advisor Client Mutual Fund Models Total Sponsor Mgr. Total Platform Advisor Min Advisor Max Minimum Client $0-$250, % N/A 0.23% 0.50% 2.00% 0.73% $250,000-$500, % N/A 0.22% 0.50% 2.00% 0.72% $500,000-$1M 0.20% N/A 0.20% 0.50% 2.00% 0.70% $1M+ 0.16% N/A 0.16% 0.50% 2.00% 0.66% Min. Investment $25,000 Office J8A Min. Annual $120 Sponsor + Manager = Platform Platform + Advisor = Client (excludes expense ratios of the model) 25

26 Separately Managed Account (SMA) Program You will be charged an advisory fee for the management of your Program Account. This advisory fee covers services which include portfolio construction, asset allocation, the ongoing review, at least annually, of your Program Account and certain brokerage related services. The advisory fee is charged quarterly in advance based upon the average daily market value of the assets in your Program Account during the previous calendar quarter. The market value of assets designated by you as Unsupervised Assets (as defined in the Services, s & Compensation section of this brochure) will not be included in the average daily market value calculation. The advisory fee has two components: a Platform and an Advisor. The Platform compensates IPI, EPS, and Pershing for the services provided to your Program Account, including use of the EPS platform, trading, and custodial services. The Advisor is paid to your IPI Investment Advisory Representative for providing investment advice to you and may be negotiated. For accounts with third party managers, the Platform fee will include the Manager. In the case of the Advisor as PM, the advisor is the manager. Understanding your fees: Sponsor + Manager = Platform Platform + Advisor = Client (Client excludes expense ratios of the funds in the model) The advisory fee charged to your Program Account does not cover charges resulting from SEC fees, electronic fund and wire transfer fees, and miscellaneous charges. It does not include fees charged by mutual fund companies to manage mutual funds held in your Program Account. You may obtain a schedule of these miscellaneous charges from your IPI Investment Advisory Representative. Please refer to the mutual fund prospectus of each mutual fund for fees charged by the mutual fund company. Separate Managed Account (SMA) Programs Sponsor Manager Platform Advisor Client SMA Equity Total Sponsor Mgr. Avg. Mgr. Avg. 26 Min Platform Max Platform Advisor Min Advisor Max Minimum Client $0-$250, % 0.40% 0.50% 0.75% 0.85% 0.50% 2.00% 1.25% $250,000-$500, % 0.40% 0.50% 0.72% 0.82% 0.50% 2.00% 1.22% $500,000-$ % 0.40% 0.50% 0.67% 0.77% 0.50% 2.00% 1.17% $ $1M 0.23% 0.40% 0.50% 0.63% 0.73% 0.50% 2.00% 1.13% $1M+ 0.19% 0.40% 0.50% 0.59% 0.69% 0.50% 2.00% 1.09% Min. Investment $100,000 Min. Annual $220 Office J8C Sponsor + Manager = Platform Platform + Advisor = Client (excludes expense ratios of the model)